The ACIT, Central Circle- 1(4), Ahmedabad V. Shri Kanubhai Haribhai Patel, Gandhinagar

ITSSA 431/AHD/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2444 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIUN
• Assessee Lawyers: TUSHAR P HEMANIAR
• Keywords: Principle of natural justice; Question of law; Revised return
• Section: 54B; 54F; 234B; 131

Judgement Text

, CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 431/AHD/2013 ( / ASSESSMENT YEAR : 2011-12) ACIT CENTRAL CIRCLE 1(4), AHMEDABAD / VS. SHRI KANUBHAI HARIBHAI PATEL 18, RADHEY GREENS BANGLOWS, OPP. NID, SARGASAN ROAD, GANDHINAGAR-382421 ./ ./ PAN/GIR NO. : BKTPP 6665 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI JAMES KURIUN SR.D.R. / RESPONDENT BY : SHRI TUSHAR P. HEMANI,A.R. / DATE OF HEARING 25/11/2016 / DATE OF PRONOUNCEMENT 29/11/2016 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER OF THE CIT(A)-I AHMEDABAD DATED 26/09/2013 FOR A.Y 2011-12 FOLLOWING GROUND HAVE BEEN TAKEN:- THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO ADJUST THE SEIZED CASH AGAINST THE TAX LIABILITY U/S 140A(3) OF THE ACT AND CHARGE INTEREST U/S 234B & 234C ACCORDINGLY, BECAUSE SECTION 132(1) OF THE ACT PROVIDE ONLY FOR ADJUSTMENT OF SEIZED CASH AGAINST THE AMOUNT OF ANY EXISTING LIABILITY UNDER THE INCOME TAX ACT, WEALTH TAX ACT, EXPENDITURE TAX ACT AND INTEREST TAX ACT, AND THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF ASSESSMENT. ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 2 - 2. THE FACTS OF THE CASE ARE THAT CONSEQUENT UPON THE SEARCH PROCEEDINGS, THE ASSESSEE HAS FILED HIS RETURN OF INCOME U/S.139(1) OF THE ACT ON 30/07/2011 DECLARING TOTAL INCOME OF RS.5,91,27,918/- AND AGRICULTURE INCOME OF RS.1,23,550/-. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN DECLARING THE SAME INCOME OF RS.5,91,27,920/- ON 30/07/2011 I.E. AS PER THE RETURN FILED U/S 139(A) OF THE ACT. DURING THE COURSE OF HEARING, ASSESSEE HAS AGAIN FILED REVISED RETURN OF INCOME ON 20/02/2013 DECLARING TOTAL INCOME OF RS.5,80,02,940/- INCLUDING LONG TERM CAPITAL GAIN OF RS.5,78,52,978/-. THE AGRICULTURE INCOME WAS SHOWN AT RS.1,58,918/-. THE TOTAL INCOME CONSISTS OF LONG TERM CAPITAL GAIN AND BANK INTEREST. THEREAFTER, STATUTORY NOTICE WAS ISSUED TO THE ASSESSEE AND FILED HIS REPLY AND IT WAS FOUND THAT THE SHELADIA GROUP HAD PURCHASED A LAND ADMEASURING 12.233 BIGHA AT BLOCK NO.184P KUDASAN VILLAGE, GANDHINAGAR IN THE MONTH OF JULY 2010 FROM PATEL FAMILY CONSISTING OF (1) SHRI KANUBHAI H. PATEL & FAMILY (2) SHRI SHIVAM K. PATEL & FAMILY AND (3) SHRI HARJIVANDAS K. PATEL & FAMILY. DURING THE SEARCH PROCEEDINGS, THREE MOUS WERE FOUND AND SEIZED FROM THE OFFICE PREMISES OF AKSHAY ORGANIZERS PVT. LTD. (PAGE NO.48 TO 55 & 56 TO 64 OF ANNEXURE A-1/ 1). AS PER THE MOUS, THE PURCHASE PRICE OF LAND WAS DECIDED AT RS.3.84 CRORE PER BIGHA. THESE MOUS WERE DULY SIGNED/THUMB IMPRESSED BY ALL THE INVOLVED PARTIES AND WAS NOTARIZED. AS PER THE MOUS, THE TOTAL COST OF 12.233 BIGHA LAND WORKED OUT TO RS.46.97 CRORE. HOWEVER, AS PER THE DOCUMENTS EXECUTED, THIS LAND ADMEASURING 12.233 BIGHA WAS PURCHASED FOR RS.2.45 CRORE. ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 3 - 3. DURING THE POST SEARCH PROCEEDINGS, IN THE STATEMENT RECORDED U/S.132(4) AND 131 OF THE ACT, WHEN CONFRONTED WITH THE MOUS, THE MAIN PERSONS OF SHELADIA GROUP ADMITTED PAYMENT OF CASH OF RS.25,92,77,200/- TO THE SELLERS FOR PURCHASE OF THIS LAND. DURING THE POST SEARCH PROCEEDINGS STATEMENTS WERE ALSO RECORDED OF THE SELLERS (ASSESSEE AND OTHER MEMBERS OF PATEL FAMILY) AND THEY ALSO ADMITTED OF HAVING RECEIVED CASH FOR THEIR PART OF LAND FROM THIS DEAL. THE DETAILS OF THE DEAL CAN BE SUMMARIZED IN TABULAR FORM AS UNDER. SR. NO NAME OF THE SELLER AREA OF LAND PRICE SHOWN IN THE DOCUMENT AMOUNT PAID AS PER MOU ON MONEY RECEIVED REMARKS 1. SHRI KANUBHAI H. PATEL & FAMILY 5.43 BIGHA 1,00,00,000 20,82,43,200 19,82,43,200 2. SHRI SHIVAM K. PATEL & OTHERS 5.63 BIGHA 1,05,00,000 21,61,92,000 1,97,22,000 BALANCE AMOUNT ADJUSTED BY EXCHANGE OF LAND AT DHANAJ 3. SHRI HARJIVANDAS K. PATEL & OTHERS 1.18 BIGHA 40,00,000 4,53,12,000 4,13,12,000 TOTAL 12.233 2,45,00,000 46,97,47,200 25,92,77,200 4. OUT OF THE 12.233 BIGHA OF LAND SOLD BY THE PATEL FAMILY TO SHELADIA GROUP, PART OF LAND ADMEASURING 5.43 BIGHA BELONGED TO ASSESSEE AND HIS FAMILY MEMBERS CONSISTING OF HIS BROTHER SHRI ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 4 - VISHNUBHAI H. PATEL, HIS SISTERS SMT. LILABEN H. PATEL AND SMT. PREMILABEN H. PATEL. THE SALE DEED IN RESPECT OF THIS LAND WAS REGISTERED FOR RS. 1,00,00,000/- AND EACH MEMBER OF ASSESSEE'S FAMILY RECEIVED CHEQUE OF RS.25,00,000/-. HOWEVER, AS PER THE MOU, THE ASSESSEE AND HIS FAMILY MEMBERS RECEIVED TOTAL SALE CONSIDERATION OF RS.20,82,43,200/- (@ RS.3.84 CRORES PER BIGHA OF LAND), WHICH INCLUDED AMOUNT OF RS.L,00,00,000/- RECEIVED BY CHEQUE AND RS.19,82,43,200/- BY CASH FROM THE SHELADIA GROUP. THIS FACT, WAS ADMITTED BY THE ASSESSEE IN HIS STATEMENT RECORDED ON OATH U/S 132(4) OF THE I.T. ACT-ON 14.12.2010 AND RECONFIRMED BY HIM VIDE ANOTHER STATEMENT GIVEN BY HIM U/S 131 OF I.T. ACT ON 29.12.2010 &B 22/03/2011. SINCE THE AGRICULTURAL LAND IN QUESTION IS WITHIN THE JURISDICTION OF GANDHINAGAR MUNICIPALITY, THEY AGREED TO PAY TAXES ON THE CAPITAL GAIN ARISING ON SALE OF THE AFOREMENTIONED LAND. 5. SMT. PREMILABEN AND SMT. LEELABEN ARE SISTERS OF ASSESSEE, WHO WERE EQUAL SHARE HOLDERS AS THEIR BROTHERS SHRI KANUBHAI H. PATEL AND SHRI VISHNUBHAI H. PATEL. HOWEVER, VIDE THEIR SUBMISSIONS DATED 23/02/2011 BEFORE THE ADIT (INV.), THE ASSESSEE AND VISHNUBHAI H. PATEL SUBMITTED THAT THEIR SISTERS HAD RELINQUISHED THEIR RIGHT IN THE PROPERTY WITHOUT ANY CONSIDERATION AND THEY DID NOT RECEIVE ANY CASH AMOUNT FOR TRANSFER OF THE LAND AND THE CAPITAL GAIN ARISING OUT OF THE TRANSACTION MAY BE ASSESSED IN A.Y. 2011-12 IN THE HANDS OF ASSESSEE AND HIS BROTHER IN THE RATIO OF 50:50. ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 5 - 6. IT IS ALSO RELEVANT TO MENTION HERE THAT THE LAND UNDER QUESTION (ADMEASURING TOTAL AREA OF 27.83 BIGHAS) WAS INHERITED PROPERTY OF PATEL FAMILY. PRIOR TO SALE, THIS LAND WAS JOINTLY OWNED BY SEVEN FAMILIES, ARE AS UNDER: A. KANUBHAI HARIBHAI PATEL, VISHNUBHAI H. PATEL, LILABEN H. PATEL, PRAMILABEN H.PATEL. B. HARJIVANBHAI K PATEL, PRAVINBHAI H. PATEL, SURESHBHAI H.PATEL, VINODBHAI H. PATEL, KOKILABEN H. PATEL. C. SAKRIBEN KISHORBHAI PATEL, SHIVAM .K. PATEL, SHARMILABEN K. PATEL. D. SHANTABEN M. PATEL. E. MADHUBEN C. PATEL. F. HIRABEN N. PATEL. G. KAMUBEN D. PATEL. 7. OUT OF THE TOTAL LAND ADMEASURING 27.83 BIGHAS INHERITED BY THE MEMBERS OF PATEL FAMILY, LAND ADMEASURING 12.233 BIGHAS HAS BEEN SOLD TO SHELADIA GROUP. PAGES NO.8 TO 10 OF ANNEXURE A/1 FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERATION FROM THE RESIDENCE OF THE ASSESSEE CONTAINS VARIOUS DETAILS REGARDING THE TRANSACTION SUCH AS AMOUNT OF EXPENSES INCURRED ON SALE OF LAND AT KUDASAN AND ALLOCATION OF AMOUNT RECEIVED AMONG FAMILY MEMBERS INCLUDING FOUR BUAS OF ASSESSEE (AUNTS I.E. FATHER'S SISTERS APPEARING AT SR. NO. (D) TO (G) ABOVE). IN THIS REGARD, AT THE TIME OF RECORDING THE STATEMENT OF THE ASSESSEE U/S.132(4) OF THE ACT DATED 25/01/2011, IT IS REVEALED THAT ALL THE FOUR BUAS HAD RIGHT OVER THE SAID PROPERTY. AS A PART OF FAMILY SETTLEMENT, IT WAS DECIDED UPON TO GIVE A TOTAL AMOUNT OF RS.4,40,00,000/- TO BUAS TOWARDS RELINQUISHMENT OF ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 6 - THEIR RIGHT OVER KUDASAN LAND ADMEASURING 27.83 BIGHAS. AFTER RELINQUISHMENT OF RIGHT BY THE BUAS, THE SHARE OF ASSESSEE'S FAMILY IN THE SAID LAND WORKS OUT AT 9.28 BIGHAS (27.83 / 3). THUS, THE ASSESSEE FAMILY'S SHARE TOWARDS COMPENSATION GIVEN TO BUAS FOR RELINQUISHMENT OF THEIR RIGHTS IN THE LAND WORKS OUT TO RS.1,46,66,667/-. OUT OF 9.28 BIGHAS, THE AREA OF LAND SOLD WAS ONLY 5.43 BIGHAS. UNDER THE CIRCUMSTANCES, THE PROPORTIONATE AMOUNT OF PAYMENT TO THE BUAS ATTRIBUTABLE TO PORTION OF LAND SOLD TO SHELADIA GROUP WORKS OUT TO RS.85,81,897/-. THE ASSESSEE AND HIS BROTHER WHILE COMPUTING THE CAPITAL GAINS HAS CLAIMED THE DEDUCTION OF THE PROPORTIONATE AMOUNT PAID TO BUAS TOTALING TO RS.85,81,897/- FOR THE PART OF LAND SOLD IN THE SHARING RATIO OF 50:50 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 8. IN RESPECT OF HIS 50% SHARE IN THE PROPERTY, IN THE RETURN OF INCOME, FOR THE PURPOSE -OF WORKING OUT CAPITAL GAIN, THE ASSESSEE HAS SHOWN FULL VALUE OF CONSIDERATION AT RS.9,98,30,652/- [RS.10,41,21,600 (50% OF RS.20,82,43,200) MINUS RS.42,90,948 (50% OF 85,81,897/- BEING AMOUNT PAID TO BUAS). AFTER INDEXATION OF COST, CAPITAL GAINS AT RS.9,95,21,793/- HAS BEEN SHOWN, OUT OF WHICH THE ASSESSEE HAS CLAIMED EXEMPTION U/S. 54F & 54B OF THE ACT AGGREGATING RS,4,16,68,815/-. ACCORDINGLY, THE ASSESSEE OFFERED NET LONG TERM CAPITAL GAIN OF RS.5,78,52,978/- IN THE RETURN OF INCOME. PENALTY PROCEEDINGS U/S 271AAA OF THE ACT ARE SEPARATELY INITIATED IN RESPECT OF THIS DISCLOSURE MADE AS A RESULT OF SEARCH. ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 7 - 9. FINALLY TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.5,80,02,940/- AND AGRICULTURAL INCOME (FOR RATE PURPOSE) 1,58,918/-. 10. AGAINST THE SAID ORDER ASSESSEE PREFERRED STATUTORY APPEAL BEFORE THE CIT(A) APPEAL. IN HIS FINDING LD CIT(A) OBSERVED THAT THE PROCEDURE OF TREATMENT OF SEIZED CASH IS DESCRIBED IN SECTION 132(B) OF THE IT ACT. THE SEIZED CASH MAY REPRESENT THE INCOME OF THE APPELLANT BUT IT CANNOT BE APPROPRIATED TOWARDS ANY TAX LIABILITY. THE SEIZED CASH CAN ONLY BE APPROPRIATED AGAINST ANY EXISTING LIABILITY UNDER THE IT, WT ACT ETC. AND THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF ASSESSMENT IN TERMS OF 132B(1) OF THE ACT. THE ISSUE THAT NEEDS TO BE DECIDED IS AS TO WHETHER ANY TAX LIABILITY CAN BE SAID TO BE EXISTING BEFORE THE DETERMINATION OF SUCH LIABILITY BY THE AO IN THE ASSESSMENT ORDER. 11. SO FAR AS THE LIABILITY FOR ADVANCE TAX IS CONCERNED, IT IS NOTED THAT AS INTERPRETED BY A FEW COURTS, THE EXPRESSION EXISTING LIABILITY IN SECTION 132(1)(I) CANNOT BE READ TO EXCLUDE A PARTICULAR TAX LIABILITY, IF IT CAN BE SHOWN TO HAVE EXISTED ON A PARTICULAR DATE. SECTION 132B(1)(I) OF THE ACT DOES NOT PROHIBIT UTILIZATION OF THE AMOUNT SEIZED DURING THE COURSE OF SEARCH TOWARDS THE ADVANCE TAX PAYABLE ON THE AMOUNT OF UNDISCLOSED INCOME DECLARED DURING THE COURSE OF SEARCH PRIOR TO 01.06.2013 BECAUSE ONLY AFTER THE AMENDMENT BROUGHT ON THE STATUTE BY THE FINANCE ACT, 2013 HAS THE EXPLANATION 2 BEEN INSERTED WHICH ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 8 - CATEGORICALLY PREVENT THE ADJUSTMENT OF SEIZED CASH AGAINST ADVANCE TAX BY STIPULATING THAT EXISTING LIABILITY DOES NOT INCLUDE ADVANCE TAX PAYABLE. ON THE ORDER HAND, IN THE CASE OF RAMJILAL JAGANNATH & OTHERS [2000] 241 ITR 758 (MP), IT HAS BEEN HELD THAT IRRESPECTIVE OF THE SEIZURE OF THE AMOUNT, THE ASSESSEE IS OBLIGED TO PAY THE ADVANCE TAX IN ACCORDANCE WITH LAW AND IF HE HAD NOT PAID THE ADVANCE TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, HE COULD NOT AVOID THE LIABILITY EITHER UNDER SECTION 234B OR SECTION 234C. THE REQUEST OF THE ASSESSEE FOR ADJUSTMENT OF SEIZED CASH CANNOT BE MADE AGAINST ADVANCE TAX. 12. HOWEVER, EVEN IF ADVANCE TAX LIABILITY IS ACCEPTED AS AN EXISTING LIABILITY FOR THE PURPOSES OF SECTION 132B(1)(I) OF THE ACT, THE SAME NEEDS TO BE DETERMINED SO AS TO ALLOW THE AO TO MAKE THE NECESSARY ADJUSTMENT. IT IS AN UNDISPUTED FACT THAT PAYMENT OF ADVANCE TAX IS VOLUNTARY ONE. THE ASSESSEE WHO IS LIABLE TO MAKE PAYMENT OF ADVANCE TAX IN TERMS OF SECTION 208 OF THE ACT, IS REQUIRED TO MAKE PAYMENT OF ADVANCE TAX ON HIS OWN ACCORD ON HIS ESTIMATED CURRENT INCOME IN APPROPRIATE INSTALLMENTS AS PRESCRIBED. THE AO MAY ALSO DETERMINE THE ADVANCE TAX LIABILITY OF THE APPELLANT U/S 210(3) / 210(4) READ WITH SECTION 209(1)(B) AND 209(1)(C) OF THE ACT. HOWEVER, DETERMINATION OF SUCH ADVANCE TAX LIABILITY BY THE AO IS NOT MANDATORY. FURTHER, EVEN OTHERWISE, FOR THE PURPOSES OF DETERMINING THE ADVANCE TAX LIABILITY BY THE AO, SUCH DETERMINATION CANNOT EXCEED THE TAX LIABILITY AS PER LATEST ASSESSED INCOME OF THE APPELLANT OR SUBSEQUENTLY FILED RETURNED INCOME, WHICHEVER IS HIGHER. IN A SEARCH RELATED CASE, THE DETERMINATION OF ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 9 - ADVANCE TAX LIABILITY BY THE AO MAY NOT SERVE ANY PURPOSE SINCE HE CAN DETERMINE SUCH LIABILITY ONLY ON THE BASIS OF LATEST ASSESSED INCOME/RETURNED INCOME SUBSEQUENTLY FILED IN TERMS OF SECTION 210(3)/210(4) OF THE ACT. THE AO CANNOT, THEREFORE, DETERMINE THE CORRECT ADVANCE TAX LIABILITY OF THE APPELLANT IN A SEARCH RELATED CASE SINCE DISCLOSED INCOME DURING THE COURSE OF SEARCH OR UNDISCLOSED INCOME UNEARTHED DURING THE COURSE OF SEARCH CANNOT BE TAKEN INTO ACCOUNT BY THE AO FOR THE PURPOSE OF DETERMINATION OF ADVANCE TAX LIABILITY. 13. THE ADVANCE TAX LIABILITY CAN BE SAID TO BE AN EXISTING LIABILITY ONLY IF THE APPELLANT DETERMINES THE ADVANCE TAX LIABILITY BASED ON HIS CURRENT ESTIMATED INCOME INCLUDING THE DISCLOSED INCOME DURING THE COURSE OF SEARCH AND MAKES SPECIFIC REQUEST TO THE AO TO MAKE NECESSARY ADJUSTMENT AS PER THE APPROPRIATE INSTALLMENT BEFORE THE INSTALLMENTS BECOME DUE. THIS IS THE CRUX OF THE JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT. 14. THE AO CAN RECOVER THE AMOUNT OF TAX FROM THE SEIZED CASH OF THE APPELLANT ONLY IF THE TAX LIABILITY OF THE APPELLANT EXISTS AT THE TIME OF SUCH RECOVERY. IN THE PRESENT CASE, THE AO HAS NOT DETERMINED THE ADVANCE TAX LIABILITY OF THE APPELLANT U/S 210(3)/210(4) READ WITH SECTIONS 209(1)(B) AND 209(1)(C) OF THE ACT. THE APPELLANT HAS ALSO NOT QUANTIFIED/DETERMINED HIS TAX LIABILITY BASED ON HIS CURRENT ESTIMATED INCOME. THEREFORE, NO ADVANCE TAX LIABILITY CAN BE SAID TO BE EXISTENT U/S ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 10 - 218 OF THE ACT WHICH CAN BE RECOVERED OUT OF THE SEIZED CASH. IN VIEW OF THIS, THE SEIZURE OF SUCH BYTE DEPARTMENT CANNOT BECOME PAYMENT FOR ADVANCE TAX BY THE APPELLANT ALL BY ITSELF ON THE DATE OF SEIZURE OF CASH. 15. THE APPELLANT HAS CLAIMED FOR THE ADJUSTMENT OF THE SEIZED CASH AGAINST THE TAX PAYABLE AS PER RETURNS OF INCOME. THE APPELLANT HAS FILED THE RETURN OF INCOME ON 30.07.2011. THUS, THE TAX LIABILITY OF THE APPELLANT HAS COME INTO EXISTENCE AS PER SECTION 140A(3) OF THE ACT FROM THE DATE OF FILING THE RETURN OF INCOME. IN VIEW OF THE ABOVE DISCUSSION, THE AO SHOULD HAVE ADJUSTED THE SEIZED CASH AGAINST TAX LIABILITY OF THE APPELLANTS WHICH CAME INTO EXISTENCE U/S 140A(3) OF THE ACT WITH EFFECT FROM THE DATE OF FILING OF RETURN OF INCOME. THE NON-ADJUSTMENT OF THE SEIZED CASH AGAINST THE TAX LIABILITY U/S 140A(3) OF THE ACT, ON THE PART OF THE AO, AND CHARGING OF INTEREST FOR NON-PAYMENT OF SELF-ASSESSMENT TAX WHEN THE CORRESPONDING AMOUNT OF SEIZED CASH IS IN POSSESSION OF DEPARTMENT, IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 16. IN VIEW OF THE ABOVE AND CONSIDERING THE FACT THAT THE TAX LIABILITY U/S 140A(3) CAME INTO EXISTENCE WITH EFFECT FROM THE DATE OF FILING OF RETURN OF INCOME, THE AO IS DIRECTED TO GIVE CREDIT TO THE APPELLANT FOR THE PAYMENT OF SELF ASSESSMENT TAX U/S 140A(3) OUT OF THE SEIZED CASH WITH EFFECT FROM THE DATE OF FILING OF RETURNS OF INCOME IN THE CASE OF EACH OF THE APPELLANTS. THE AO IS DIRECTED TO CHARGE INTEREST U/S 234B & 234C OF ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 11 - THE ACT AFTER MAKING ABOVE ADJUSTMENTS. ACCORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWED SUBJECT TO ABOVE FINDINGS. GROUND NO.2 RELATES TO INITIATE OF PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE IT ACT, 1961. NO APPEAL LIES AGAINST THE INITIATION OF PENALTY UNDER SECTION 271AAA IF THE IT ACT. APPEAL COULD ARISE ONLY WHEN PENALTY UNDER SECTION 271AAA IS LEVIED. IN VIEW OF THE ABOVE THIS GROUND IS DISMISSED . 17. LEARNED CIT(A) PARTIALLY ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE SAID ORDER THE DEPARTMENT IS BEFORE US. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER PASSED BY THE AUTHORITIES BELOW AND LD.AR HAS FILED OUR CO-ORDINATED BENCH JUDGMENT [2013] 34 TAXMANN.COM 307 (AHMEDABAD-TRIBUNAL), IN WHICH IT WAS HELD, YES - WHETHER, WHERE ASSESSING OFFICER APPLIED EXPLANATION RETROSPECTIVE IN CASE OF ASSESSEE AND ADJUSTED CASH SEIZED TOWARDS SELF ASSESSMENT TAX INSTEAD OF TOWARDS ADVANCE TAX PAYABLE AS CLAIMED BY THE ASSESSEE, IT WAS NOT SUSTAINABLE. HELD, YES - WHETHER, THEREFORE, CASH SEIZED WAS TO BE ADJUSTED AGAINST ADVANCE TAX PAYABLE FOR THE ASSESSMENT YEAR IN QUESTION AND IT WAS FURTHER HELD THAT LD AO APPLIED EXPLANATION TO SECTION 132(B) ACCORDING TO WHICH THE EXISTING LIABILITY DID NOT INCLUDE ADVANCE TAX PAYABLE. HE, THUS ADJUSTED THE CASH SEIZED TOWARDS SELF ASSESSMENT TAX AND LEVIED INTEREST UNDER SECTION 243(B) AND 234(C) AND SAME IS AMOUNT TO MISCARRIAGE OF JUSTICE AND IN THE CASE OF KAMLESH BHOGILAL KANDOI M/S. BHOGILAL MULCHAND KANDOI VS. ACIT TAX APPEAL NO. 55 OF 2002 HONOURABLE JURISDICTION HAS HELD THAT CASH SEIZED FROM THE ASSESSEE FIRM, ON AN APPLICATION GIVEN BY THE ASSESSEE BEFORE THE END OF THE PREVIOUS ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 12 - YEAR RELEVANT TO THE ASSESSMENT YEAR 1993-94, OUGHT TO HAVE BEEN ADJUSTED AGAINST THE LIABILITY OF ADVANCE TAX FOR THE A.Y. 1993-94 BY THE REVENUE SUBJECT TO PAYMENT UNDER SECTION 234(B) & (C) OF THE ACT. THE TRIBUNAL HAS ERRED IN PLACING RELIANCE ON THE DECISION OF THE M.P. HIGH COURT. IN THIS REGARD WE ARE SUPPORTED BY THE VIEW TAKEN BY THE DELHI HIGH COURT IN THE CASE OF K.K. MARKETING (SUPRA) WHEREIN IT IS HELD AS UNDER: WE ARE OF THE VIEW THAT THE PRESENT APPEALS DO NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. THERE IS NO DISPUTE THAT THE OFFER FOR ADJUSTMENT OF THE SEIZED CASH WAS MADE BY THE ASSESSEES BEFORE THE ADVANCE TAX LIABILITY BECAME DUE. THEREFORE, IT IS NOT AS IF THE ASSESSEE HAD ANY INTENTION OF SHIRKING THEIR ADVANCE TAX LIABILITIES. IN SIMILAR CIRCUMSTANCES, THE TRIBUNAL HAD TAKEN THE VIEW THAT ADJUSTMENT OF THE CASH RECOVERED COULD BE MADE AGAINST ADVANCE TAX LIABILITY AND THE REVENUE IN THE GROUNDS OF APPEAL HAS NOT DISPUTED THIS. THE ORDERS PASSED BY THE TRIBUNAL IN THIS REGARD, WHICH HAVE BEEN REFERRED TO IN PARAGRAPH 9 OF THE IMPUGNED ORDER; APPEAR TO HAVE BEEN ACCEPTED BY THE REVENUE. IN SO FAR AS THE ADJUSTMENT OF THE CASH SEIZED AGAINST THE LIABILITY OF THE FIRM IS CONCERNED, THE TRIBUNAL RIGHTLY HELD THAT THERE IS NO DIFFERENCE BETWEEN A FIRM AND ITS PARTNERS. ITS PARTNERS CONSTITUTE A FIRM AND THEY ARE LIABLE TO MAKE GOOD ANY DEMAND OF TAXES ON BEHALF OF THE FIRM. THE PARTNERS OF THE CONCERNED ASSESSEE HAD CATEGORICALLY PRAYED THAT THE CASH SEIZED FROM THEIR PREMISES, WHICH ALSO HAPPENED TO BE THE PREMISES OF THE FIRM, SHOULD BE ADJUSTED AGAINST THE ADVANCE TAX LIABILITY OF THE FIRM/ASSESSED. SUCH A REQUEST COULD HAVE BEEN MADE BY THE PARTNERS TO BIND THE ASSESSEE AND THERE COULD NOT HAVE BEEN ANY GROUND FOR REJECTING SUCH A REQUEST. IT MUST ALSO BE NOTED THAT THE REVENUE ACCEPTED THE RETURN FILED BY THE ASSESSEES AND IN FACT IT WAS FOUND THAT THEY WERE ENTITLED TO A REFUND, WHICH WAS MORE THAN THE AMOUNT OF CASH THAT WAS SEIZED. ON THE BASIS OF THE ABOVE FACTS, WE DO NOT FIND ANY ERROR OF LAW HAVING BEEN COMMITTED BY THE TRIBUNAL IN ACCEPTING THE CONTENTION URGED BY THE ASSESSEES. WHILE IT IS TRUE THAT TAX LAWS AND EQUITY DO NOT ALWAYS GO HAND IN HAND, BUT IN THE PRESENT CASES, SINCE THERE IS NOTHING TO PROHIBIT THE ASSESSEES ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 13 - FROM MAKING A REQUEST FOR ADJUSTMENT OF THE CASH SEIZED AGAINST ADVANCE TAX LIABILITIES, EQUITY DEMANDS THAT THE CASH AMOUNT OUGHT TO HAVE BEEN ADJUSTED AS PRAYED FOR BY THE ASSESSEES TO SAVE IT FROM ANY LIABILITY OF INTEREST. 18. IN THE PRESENT CASE, WE DO NOT FIND THAT ASSESSEE HAD ANY INTENTION OF SHIRKING ITS ADVANCE TAX LIABILITIES AND CONSIDERING THE PROVISIONS OF LAW, THE REVENUE OUGHT TO HAVE CONSIDERED THE ASSESSEES APPLICATION WHICH WAS MADE WELL IN POINT OF TIME SUBJECT TO PROVISIONS OF SECTION 234 (B) AND (C) OF THE ACT. WE THEREFORE ANSWER QUESTION NO. 2 IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 19. THEREFORE, IN OUR CONSIDERED OPINION WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A) ORDER AND SQUARELY COVERED BY THE DECISION OF OUR JURISDICTIONAL HIGH COURT IN THE MATTER OF KAMLESH BHOGILAL KANDOI M/S. BHOGILAL MULCHAND KANDOI VS. ACIT, TAX APPEAL NO. 55 OF 2002. THEREFORE, APPEAL OF THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29 /11/2016 SD/- SD/- ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY AHMEDABAD; PRITI YADAV ITA NO.431/AHD/2013 ACIT VS.KANUBHAI HARIBHAI PATEL ASST.YEAR 2011-12 - 14 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-I, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD